Deposits are a litigated issue between landlord and tenant. Legally, the landlord has to protect the deposit in a Government backed scheme. Should they not, there can be fairly severe consequences.
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Deposits have become far more regulated in recent years. As a tenant, you trust that the landlord will deal with the deposit, and all being well when the tenancy ends, will return it so you. As a landlord, you may have a reasonable belief that you will have to reduce the deposit monies due to disrepair, or outstanding rent. The most common disputes relating to deposits is the deduction made to put right any disrepair.
Your landlord has a duty to place your deposit in a Government-backed tenancy deposit scheme if you have an Assured Shorthold Tenancy. By doing this, an independent third party will ensure that you’ll receive your deposit back if certain eligibility has been fulfilled.
If you are a landlord, be aware, you must put the deposit in a Government-backed scheme within 30 days of receiving it.
At the end of tenancy, the landlord must return the deposit within 10 days of agreeing how much is due. If there is a dispute, the deposit will be protected in the Government-backed scheme until the issue has been resolved.
Once you receive the deposit, you have 30 days to tell the tenants specific information including how the deposit is protected, details of the deposit scheme and how to apply to get the deposit back.
If you don’t protect the deposit, the Court can order you to repay it or pay it into a Government-backed scheme. The Court could also order you to pay up to 3 times the deposit within 14 days of making the order.
A rare but perfectly capable situation is the Court deciding the tenant can stay in the property when the tenancy ends. Furthermore, if you do not protect the deposit, you cannot evict a tenant under the accelerated procedure of Section 21 and the tenancy can only be ended if there is a breach by the tenants.
When you are visiting prospective properties, you could ask the estate agent/landlord which tenancy deposit scheme they use. The landlord is under a duty to provide you with information relating to the deposit within 30 days (see above) and if they do not, you can take the matter to Court.
If there is a dispute between either party, and the deposit is held in a Government-backed scheme, there will be a free service you can use to sort out disagreements about deposits. However, if the parties do not agree, the matter may still need to go to Court.
It may be that you know your tenants personally, or they rent on a more informal basis. If you don’t use a Government-backed scheme, and the tenant is aware and agrees, you should be aware of the implications.
Should a landlord need to evict a tenant and they have decided not to protect the deposit, they cannot use the accelerated procedure and it will take longer to regain possession. There is always the risk that the tenant will make a claim regardless of your relationship, so it’s advisable just to use the Government-backed scheme.
Specialist Landlord Services
My name is Carol O’ Leary. I am a lawyer who specialises in landlord and tenant legal services. We aim to provide our clients with an outstanding legal service.
We will help and support you and most importantly we work hard for you.
Please contact us for a free, no obligation chat at either our Corby office on 01536 276300 or our Kettering office on 01536 311690 or contact us online.